Somebody always pays. ALWAYS. Maybe not now, maybe not in obvious ways with a bill in the mail, but there is always a cost when the government does something. Some spending is reasonable, the cost known, understood, and generally agreed to and agreed upon. We can quibble over particular programs or numbers or actions, but nearly all serious people agree that some government spending is a cost we should bear, and paying taxes for it is the way to get it done.
But virtually nobody in politics at the national level is addressing the big-picture elephant in the room. We have a huge official debt (national, state, municipal), staggering future obligations (SS, other retirement plans, etc), and are running an absurdly large annual federal deficit. Simple mathematics says it cannot continue. That which cannot continue, won’t.
Who pays? There are only four options.
1) We can balance the budget (and keep it balanced !) and start paying down debt by cutting spending down to below revenue levels. That means current recipients of government spending (defense and other contracts, personnel wages, benefits payments, cutting programs, etc) pay right now in obvious ways. Congress has constantly shown they are utterly unable to do that.
2) Raise tax revenues until it balances. Not just raise marginal rates, but actually take more money out of people’s pockets. That will crush the economy and cause capital flight like never before. It will cause an economic death-spiral that will be hard to pull out of. It will lead to unprecedented levels of corruption and problems as the ROI of tax avoidance increases, which will spur redoubled efforts at tax collections… with all its attendant abuses and problems. This means that current workers and employers will carry the cost.
[side note – many people will desire to aim for the “middle way” and do some of both (1) and (2), but given the people in DC any attempt to do that will likely result in both missing the target AND incurring the worst side-effects of both]
3) Kick the can down the road a little longer, growing the debt, thereby implicitly demanding our children and grandchildren are the ones to pay impossibly crushing, confiscatory levels of taxes.
4) Screwing all savers – mostly the elderly and retirees – by inflating the debts away, destroying accumulated wealth and money. A variant of this is to simply repudiate the debts, but this is much less likely.
The only political debate I’d like to see over the next year is one where all the candidates kick around that fundamental question, and end by having to pick one of those four options. Or course the media would never ask it, and no politician would attend, but I can dream.